A Great Example of Lawyers Wasting Money

Pricing for eDiscovery and technology services in litigation is not a straightforward matter. But it should be.

Unfortunately, many lawyers and corporations don’t know much about what eDiscovery costs or what services a vendor provides until after litigation begins. Thanks to a recent ruling, In re Aspartame Antitrust Litig., 416 Fed. Appx. 208 (3d Cir.2011), we have at least a peek behind the curtain. In this case, the court was asked to calculate recoverable eDiscovery costs, and in doing so, provided an itemized list of the costs three seperate parties incurred in one large, but fairly typical case.

In this matter, three defendants were awarded almost $800,000 in eDiscovery and related technology costs for services ranging from the restoration of backup tapes to data extraction. However, it’s not clear that all of these charges were necessary.

Fighting Over Pointless Charges
The eDiscovery industry is still very fragmented and there are a lot of companies that provide very limited services for what seems like an extreme cost. For example, there are companies in eDiscovery that create software products to solve just one problem- like identifying duplicate emails in a data collection. In this matter, the defendants paid tens of thousands of dollars to a large number of vendors for services that should be, theoretically, part of an integrated solution.

In the In re Aspartame Antitrust Litigation, much of the cost was associated with processing and production. One party paid over $34,000 just to use a software for data extraction and processing. Additionally, Bates Labeling, Confidentiality Coding and “Production Support Services” are an additional line item on the list of charges. The same goes for OCR and conversion of TIFF to PDFs. All of these services are included with a Discovery Cloud license. Users can perform these functions themselves at no charge, or pay our services team by the hour to process data.

Most shockingly, one party collected 366 gigabytes of potentially responsive data in the case, and claimed $100,000 in expenses for processing the data. Even if Nextpoint provided our full-service intake of the data for them for all of the data, our charges would have been a third of that. When processing data sets of that size, we generally counsel clients to budget some time for error investigation and remediation as there will inevitably be some files that don’t process due to corrupt files, password protection, etc. But even budgeting an extra 10 percent for these issues, the final charge is more than double the cost to provide this service in our cloud platform.

Then there’s lots of costs that are just plain archaic. In this case, the parties were also awarded thousands of dollars in printing costs at .25 cents per page for photocopying, and several thousand dollars for creating DVD copies of data. In Discovery Cloud, data never needs to leave the cloud based platform, even for producing to opposing parties. It’s also interesting to note that the court denied payment for the use of concept-based review software and analytics in the case, judging the tools to be not necessary for the litigation.

It’s no longer feasible for an industry to support hundreds of small companies that do one or two things and charge an exorbitant fee. It’s time for the legal world to find platforms that can scale to handle large volumes of evidence and provide the processing, review, and production functionality all in one place. Paying dozens of service providers and software makers a lot of money to provide piecemeal solutions is clearly not a sensible strategy, not when more effective and cost effective solutions exist.